- April 10, 2021 at 9:21 am #616640Noah098Member
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sir if a company has $4.5m of deductible temporary differences, expected to reverse next year. And it has $5m of taxable temporary differences, of which $3m will reverse next yr and $2m to reverse two yrs later.
the company has a legally enforceable right to offset current tax asset and current tax liabilities. The income tax is also collected by the same tax authority on the same taxable entity.
so in this case we will recognise the entire DT liability related to taxable TD but will only be able to recognise $3m(=max taxable TD available next yr) out of a total of $4.5m deductible TD, is it so????
Sir pls give as elaborate an answer as possible!
Thank you as always for your help!April 10, 2021 at 1:35 pm #616658Stephen WidbergKeymaster
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I think taxable TD are 0.5 (5-4.5)
So DT liability will be tax rate x 0.5
PROVIDED THAT temp differences relate to the same tax authority (e.g. all relate to UK tax authority). You would only have to mess about if, say, the deductible TDs were for a different tax authority – e.g. France
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